Customer Reviews

Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy

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Matt Simmons has bad news about Saudi oil, very bad. Who is Matt Simmons? He's a Houston investment banker who specializes in oil. He's a member of the National Petroleum Council and the Council on Foreign Relations. Not a radical environmentalist, in other words, quite the opposite. What Simmons has done in TWILIGHT IN THE DESERT: THE COMING OIL SHOCK AND THE WORLD ECONOMY is to analyze the technical papers of the Society of Petroleum Engineers (SPE) on Saudi oil, shining a light behind the veil of secrecy that has shrouded it since OPEC stopped reporting oil production data in 1982. In short, what the SPE reports reveal is that the official Saudi claims for reserves and production capacity are vastly overstated. Further, tragically, it seems that the fields have been mismanaged, making it unlikely that all the oil will ever be recovered.

Now someone with a suspicious mind might suspect that Simmons, a banker, has an interest in leading the market to believe that oil is scarce, because that will put upward pressure on the price, and the oil companies and he, their banker, will benefit. I do have a suspicious mind, but I am convinced by Simmons's meticulous presentation of the SPE data. It is probably the single most important piece of evidence that the world is entering the Hubbert's peak for oil ("peak oil" as it is colloquially and ungrammatically known). He systematically presents the data on every single big Saudi oilfield, from the biggest of all, Ghawar, which as of 1994 still produced 63% of all Saudi oil, through Abqaiq, Safnaya, Berri, Zulaf, Marjan, Shaybah, and smaller fields.

Are there vast untapped reserves in Saudi Arabia? According to the SPE data, the answer is no. No giant fields have been discovered since 1968, despite intensive exploration. Here is a list of crisp facts about world oil, according to Simmons (p. 331):

1) Only a handful of super-giant oilfields have ever been discovered in Saudi Arabia and the Middle East -- they represent a very significant portion of all ME oil, and they are all very mature.

2) All mature giant oilfields peak and decline (production profiles showing the peaks are shown for 8 fields in Texas, Alaska, the North Sea, and Russia). Implication: sophisticated new technology will not prevent or forestall this from happening.

3) There do not seem to be many giant oilfields left to be discovered in Saudi Arabia or the ME.

4) Non-OPEC oil, excluding the FSU (former Soviet Union) seems to be peaking, or has already peaked.

The consequences of all this, needless to say, are grim. It's been increasingly clear in recent years that oil had peaked everywhere else, but there was still supposed to be a vast reserve under the Saudi sands. Apparently this was a mirage. What this means is that we have to make the development of new energy sources the top priority! Of course, in the middle to long-term, it will have to be renewable energy, and the faster we move to solar, wind, and biofuels the better (See Hermann Scheer's excellent THE SOLAR ECONOMY.) In the transition, which is likely to be a rough ride, other less desirable alternatives are all but inevitable. Balancing available inputs (ie, plentiful coal) with toxic outputs and global warming will be a Faustian bargain. One thing we must demand here in the U.S. is an immediate major increase in the CAFE -- corporate average fuel economy, the standard for fuel efficiency. There is no reason it shouldn't be raised to 40 MPG in a few years. CAVEAT EMPTOR!

For more vital resources on this topic, see my THE CLEAN/RENEWABLE ENERGY REVOLUTION list.

The basis of this book is fear, not unwanted fear spread by the author, but it is the emotion you start to feel as you move through the book page by page. For good or bad the U.S. and the world have become reliant on one natural resource that is controlled by a very few countries and people. This fact alone should have most of us concerned, 60% of the oil we use each day is controlled by a bunch of countries that are primarily dictatorships surrounded by people that would sooner burn the oil in mass dumping grounds instead of selling it to us regardless of the price. We have become backed into a corner and it appears that our only response so far as been to flex our power.

What will happen if the oil fields in Saudi can not keep up with demand? What if the production facilities are almost overmatched at this point and further facilities are difficult to put in place? All of these and more questions are covered in this book. The author also talks about the populations and political situation in Saudi and the picture he presents is another difficult and concerning one at that. One can only hope that the production in Iraq gets up and running or that better technology is hurried into production.

The footnotes and documented sources detailed in the book give it the appearance of a very well documented and accurate study. The details on the production process in Saudi is worth the price of the book alone. It is a rather back handed slight at our news media that the very real issues presented in this book have not yet made it to the talking heads at 6 pm. Overall I enjoyed the book a great detail. It is well written and put together. The reader is never lost in the detail no matter how little previous knowledge the reader has about the oil business. What I found was that the good was a very fast read given that it is difficult to put it down. It is a book that we all need to read.

This is a well written and well researched book by Mathew Simmons, an expert on the oil business including Middle East oil supplies. The book is a bit technical and is mostly solid information on oil extraction, the oil fields of Saudi Arabia, along with a number of projections. The best comparison that I can make is with a university reference book, but not a text book: it is a well written reference book with a very short introduction of Saudi history.

The book is a little over 400 pages in medium font, and has many maps showing the locations of the oil, schematics showing how the crude oil is actually processed, photographs, and a number of tables. There are about a dozen large oil fields in Saudi Arabia. These fields are discussed, and comparisons are made with other large active oil fields around the world, including the North Sea oil fields started in the early 1970s. The core idea of the book is that we are about to face the reality of limited oil production in Saudi Arabia and in the rest of the Middle East: the situation is not good and projected inventories and extraction rates are too optimistic. The era of growing sources seems to be over, regardless of the political situation in the Middle East. The sources cannot keep up with the demand for oil that is expected to continue to grow.

The book is divided into four sections and then has a very short appendix. The first section is just 69 pages and details the political and historical development of Saudi Arabia as a country, and the introduction of foreign oil companies.

Section two is short, just 50 pages, and covers the subject of how the oil is extracted from the ground, and what has to be done to separate the crude from water, methane, and various other contaminants to get "pure oil". This includes photographs and a number of process schematics. It goes step by step through from the discovery of a field to how the oil is actually extracted and processed, and this can differ for different stages in the life of an oil field.

Section three is the heart of the book. It is a long inventory and description of about a dozen Saudi oil fields with maps and comments. This is one of the biggest sections and takes up 110 pages. He goes through the inventory field by field explaining the size, location, problems, yields, lifetimes, etc. This is a relatively complete description of the Saudi oil situation and oil around the Middle East, in more general terms for the latter and a bit less detailed.

The last section is about 100 pages and he describes the life cycles of various oil fields to show how the oil extraction rate varies with time. Each field goes through a life cycle, sometimes lasting decades, but each has a finite cycle length and each follows a similar production trajectory, i.e.; a slow rise in output at first to a maximum rate, then a peaking, then a drop off. The author has a lot of detailed information on many oil fields from around the world, along with their production histories. Most fields around the globe are on the down slope.

Finally, he has a brief appendix with additional comments to show that the problem with the Saudi fields is an old problem, and he quotes past Congressional testimony and similar, going back from 1974 that back up his present case. The problem is not new. Saudi production is limited and the inventory figures are overly optimistic, and they have a history of being overly optimistic: production is just half of old projections, and raising production levels is not feasible.

The general thrust of the arguments is that the fields are running at near capacity, will peak soon, and then drop off. They will not last centuries or similar. The date is a bit hazy, but with exponential growth in demand it will be sooner rather than later, probably the first decade of the present century, or maybe even this year or in the next few years. At that point we will not be able to meet oil demands, especially for the emerging nations of China and elsewhere.

In summary, once the hype and opinion clears away, and the basic facts are considered, the oil situation is not good. Many economists, most politicians, and the general public have still failed to grasp that an oil based economy cannot be sustained indefinitely because of finite supplies - not taking into account whether carbon dioxide will destroy the atmosphere. Like lung cancer and smoking, there has been a long period of denial and a lack of any real effort to conserve oil or find an alternative. In any case, this book drives the point home - in spades - and with much technical detail. We are about to peak in Saudi oil production, and there are no alternatives. The tap will not be 100% turned off, but supply will peak, decrease, and not the meet demand; our economies and the use of the gasoline, jet fuel, natural gas, or diesel fuel will have to change sooner, not later. Few think that coal is a good solution, and the much promoted two step "clean-coal" has yet to be demonstrated, i.e.: step one works - the high temperature burring of coal, but step two, an effective method of sequestering the carbon dioxide is not proven. The latter is my comment.

This is a well researched and well written book that outlines serious future oil shortages. 5 stars.

In his book Beyond Oil: The View from Hubbert's Peak (2005) Kenneth S. Deffeyes warned us that peak oil is upon us and that what is left in the ground is just about the same as what we have already used. He pointed to Thanksgiving Day, 2005 as the day oil hit its peak. Now another world renowned expert on oil, Matthew R. Simmons in this densely considered book, is advising us that the estimates of oil left in the ground by the largest producer of oil, Saudi Arabia, are probably inflated, and at any rate cannot be independently confirmed.

Furthermore, it is supposed that estimates by almost all oil producing countries are inflated since such inflation improves their ability to influence the market while allowing them (OPEC members at least) to produce more.

A question that might be asked is how do we know that there are not great fields of oil somewhere waiting to be discovered? Certainly if there are, the twilight of the oil-based world economy is pushed further into the future leaving us with much less to worry about now. Simmons answers this question for Saudi Arabia at least. He makes it clear that the possibility of any great discoveries on the Arabian peninsula "must now be deemed remote" since the land has been so thoroughly explored. (See Chapter 10 "Coming Up Empty in New Exploration.")

Deffeyes answered this question in another way. Using logic from his mentor M. King Hubbert who predicted with startling accuracy when US production would peak (early 1970s) Deffeyes argues that what's left can be inferred from current production curves. Because oil exploration and production has been so extensive world-wide, if the oil were there, it would have been discovered and drilled for. This is not to say that there are not some (small) fields left undiscovered. There are some, no doubt, but like puddles added to a great lake, they won't affect the overall picture.

This same sort of logic can be applied to Saudi Arabia, and Simmons does indeed use such logic. However, he goes beyond that because he believes that oil prediction simulation models (see Chapter 12, "Saudi Oil Reserves Claims in Doubt") can fail. Typically, he writes, an oilfield will yield about 75 percent of its oil during the first half of its producing life. (p. 278) Almost all of the great Saudi fields are decades old.

The strange thing about this book is that while it is touted as another book predicting the end of oil, it actually argues that the situation is not entirely clear. It is possible that there is still a lot of undiscovered oil left in Saudi Arabia in places such as "the land along the Iraq border, an unexplored area almost as large as California" and a couple of other places. (p. 243) World wide such unexplored places are many. Nonetheless even if a lot of oil is discovered say in the middle of the Pacific Ocean or deep in the Antarctic, the cost of producing that oil will be greater than the cost of producing oil from say the great Ghawar field in Saudi Arabia where the oil gushes out of the ground almost effortlessly.

Actually, according to Simmons "effortlessly" is no longer the correct adjective to use. As oil fields grow old some help is needed to get the oil to rise to the top and flow. Water is typically pumped into the field to get the oil to elevate. Simmons reports on the extensive use of saline water in Saudi Arabia--more evidence that there is not as much oil left as the Saudis would like us to believe.

Also a distinction must be made between pure "reserves" (actual oil in the ground) and "recoverable reserves" (oil that is cost-effective to produce). And a further distinction must be made between grades of oil. It may be cost-effective to pump the sweetest, purest grade of oil out of a field whereas lesser grades would not be worth the expense.

A weakness of the book is that, despite the words "and the World Economy" in the subtitle, which suggest an exploration of consequences and what to expect, there is next to nothing about the effect less oil (than expected) will have on the world economy. Clearly, of course, and in the broadest sense, our standard of living will go down as our energy costs rise. The subtitle is probably just a book biz editor's attempt to gain a larger readership.

Twilight in the Desert is long and extraordinarily detailed and gives the typical reader more information than perhaps would be desired. This reader came away convinced that Simmons's main argument, that Saudi oil reserves have been exaggerated, is probably correct, but curiously his extremely balanced and careful delineation left me feeling that there is still plenty of doubt about both Saudi reserves and those world wide. Stay tuned.

Regardless, one thing is clear, soon or late, within twenty years or fifty, we will have to retool our economies to run on something other than fossil fuels. The sooner we get started on that, the better. If we wait too long the sudden economic shock is likely to be catastrophic.

I rated this book 5 stars because Simmons is attempting to provoke a serious discussion, on a world-wide scale, on a critical subject (and perhaps he is succeeding). I have read so much on the topic of "peak oil" that this book did not serve as a warning to me; moreover, I do not think the book is the easiest way to get started on the subject. Indeed, an article about Simmons' views, written by Adam Porter on the English-language website of Al Jazeera back in February, served as my introduction to peak oil, and I soon ordered his book from Amazon, but read lots of other books while waiting for this one.
Simmons digs into a most important subject, i.e. whether optimists (including the Saudi oil ministry) or pessimists are to be believed. He addresses this issue by combining an extensive overview of Saudi resources, capabilities, and history with an interesting and extensive description of what it actually takes to produce oil (especially today). This makes me feel I (finally) understand oil production at a depth suitable for an informed and technically aware citizen, something no other book has helped me do - before, I had to simply believe (or not) the flat statements of others. I also come away convinced beyond any doubt that worldwide oil production is now or soon will be in permanent decline. This is serious, as most readers of this review will probably already know.
I believe all of us need to read as much as we can on the subject. I have read books with titles as follows: Collapse; Overshoot; Energy and Society (first half); The End of Oil; Blood and Oil; and Beyond Oil. I check EnergyBulletin.net every day. I've looked several times at Matthew Simmons' company Web site, which contains presentations by him. I've started to look into economic issues; I found papers by John Michael Greer and Joseph Tainter thought-provoking here. There's a lot to understand, since peak oil may have consequences across any aspect of our lives. Anyway, Simmons' book fills lots of blanks in the picture.
btw, make sure you read Appendix C. And finally, Simmons is conscientious, neither polemic nor self-promoting. Where there is uncertainty on an issue Simmons is forthright in admitting it; and his claims are stated with enough detail that other experts in the field can argue any point. Because of this honesty, the book is probably going to be "the" basis for political action and public awareness.

Simmons' thesis is that Saudi Arabia's reserves and ability to produce current volumes may be on the point of collapse and as a result potentially the world economy. This is a very important book. The world depends upon Saudi oil to power the world economy, but the reserves and production potential that everyone assumes exist, may not.

There are 600 million cars in the world and 6.5 billion people-so, 5.9 billion people want a car.

World oil market is 82.5 million BOPD with 30 million BOPD from OPEC. IEA estimates 4Q05 oil demand at 86.4 million BOPD or an estimated increase of nearly 4 million BOPD by year end 2005. How will this increase in demand be satisfied?

Saudi Arabia is the largest oil producer in the world with current estimated monthly production of 9.2 million BOPD. The world has looked to Saudi Arabia to be the "swing" producer for several decades. The Saudis have invested capital to drill wells and install production infrastructure for which they receive no immediate return to maintain their "swing" producer status. The conventional wisdom is that the Saudi's currently have peak capacity of 10.5 million BOPD. The Saudi government stopped providing production volumes by field in 1982 so it is impossible for outside observers to estimate Saudi production potential or production capacity. If the Saudi's increase their daily production volumes by 1.3 million BOPD, where will the remaining 2.7 million BOPD come from to meet year end 2005 demand?

In 1979 Saudi Arabia announced total reserves of 150 billion BO. Also in 1979 they stopped reporting remaining reserves by producing field. By 1988 the Saudi's announced their reserves had increased to 260 billion BO with no significant announced field discoveries. Since 1988 they have produced about 46 billion BO, but still maintain they have remaining reserves of 260 billion BO. It's very difficult to believe that after producing 46 billion BO the remaining reserves have stayed the same-especially since there have been no known major field discoveries.

This is where Simmons comes into the debate.

In my opinion, Matt Simmons--and others like Jim Kunstler, Kenneth Defffeyes, etc.--are providing an important national service in attempting to warn us of what is coming.

Mr. Simmons' book is exhaustively researched and documented. I recommend that you read the entire book, but if you only read part of the book, read the chapter on Ghawar, the largest oil field in the world. Probably 99.99% of Americans have never heard of Ghawar, but as goes Ghawar so goes the world economy.

The Saudis are proudly boasting of their reserves and of their ability to ramp up their production. In Texas in 1972, Texas oilmen were similarly confident.

In 1972, Texas was producing an all time record high amount of oil. Since then? Texas oil produciton has fallen for 33 straight years. If Texas were the sole source of crude oil for the world, for every four gallons of gasoline that we bought in 1972, we would be bidding for one gallon today.

Once, Texas was as Saudi Arabis is today. Soon, Saudi Arabia will be as Texas is today--a permamently declining oil province.

Hopefully, just as Great Britain finally listened to Churchill and started preparing for war, Americans will start listening to Matt Simmons, et al, and start preparing for a vastly different way of life.

Many books have been published on the possibility of an impending oil crisis, but this one looks at the global oil scenario with specific focus on Saudi Arabia, the world's largest "swing" producer. The once unnoticed backward desert kingdom fragmented by infighting among several tribal warlords suddenly emerges as the world's focal point in the second half of the last century, thanks to the discovery of the giant and super giant oil fields. The first chapter of the book is a brief outline of this historic transformation under the leadership of king Abdul Aziz ibn Saud. The strategic importance of this kingdom on the global energy map was understood well by the "seven sisters" and President FD Roosevelt was quick to establish a politically important relationship with the Saudi monarch. Oil it seemed was everywhere in this kingdom, and soon the world's most important oil company Aramco was born. Owned by foreign shareholders, this company does not lose much time to pump out the world's best crude oil in large quantities with a view to maximise shareholder returns in the short run. When the regional political scenario changed in the 1970's with the Arab-Israeli conflict, Saudi Arabia nationalises Aramco and renames it as Saudi Aramco. The story thus far is well known. What happens next is the core of the book. The secrecy of the oil reserves and field wise production figures, the myth of abundant unexploited reserves and the hypothesis that Saudi Arabia is running out of oil, and fast, is a interesting read.

The book gives an excellent in-dept description of oil exploration and production. For a lay reader with no formal knowledge the subject, the information is highly valuable to get a deep insight into the subject and appreciate how and why the world's largest oil fields in Saudi Arabia have matured and would soon go dry. In the absence of direct information from Saudi Aramco, the author has relied heavily on and quoted extensively from over 200 technical papers published by company officials at SPE. The evidence to test the hypothesis is circumstantial but abundant in line with the proverbial " ..the dog that did not bark".

The book lists estimated production figures from the largest of the Saudi oil fields namely Ghawar, Safania, Abqaiq, Berri and Zuluf. While these five fields account for the kingdom's four fifth of oil production, Ghawar, the king of all kings accounts for over half of the total. At about 8 to 10 million barrels per day, the kingdom is the world's largest "swing producer" capable of opening or closing its taps whenever there is an abnormal rise or fall in global oil prices. Saudi Arabia is today the undisputed leader in the OPEC. The Saudi officials have periodically increased the estimates of proven reserves and claim to have the ability to increase oil production up to 25 million barrels per day if needed, within a decade, and sustain it for over 50 years. This book is a well researched attempt to investigate this claim and prove it as highly misleading and practically impossible.

The giant and super giants have been producing and in fact over producing in the last five years, if we go by the evidence in the book. There are significant pressure drops due to "rate sensitivity" of the oil wells and the "water cut" has substantially increased. The infrastructure including Gas Oil Separation Plants and water pumping facilities are inadequate to scale up production. The Gas Oil Ratio seems to have gone up and Saudi officials who once flared all the gas are now viewing its as a valuable commodity for sale as well as for local energy needs.

My understanding of the upstream oil industry has certainly improved after reading this book. However the topic could have been easily discussed in half the number of pages. What disappointed me was that there is very little discussion in just one chapter at the end of the book on the possibility of the coming oil shock and implications for the world economy.

While this book looks at the supply side of the problem I recommend "Addicted to Oil : America's Relentless Drive for Energy Security" by Ian Rutledge to understand the problem from the demand side under tight supply constraints.

The short review by the person mentions that there is plenty of oil left in the ground. I encourage the reviewer and the reader to understand the implications of peak oil by going to one of the various sites that go into detail regarding Hubbert's Peak.

The reviewer mentioned that there is plenty of oil to be found in tar sands and shale deposits. What he fails to mention is a simple equation of EI vs ER -- or energy invested vs energy returned. Oil coming out of Texas or Arabia at the end of WWII had a return of over 60 to 1. The tar sands are returning something like 3 or 4 to 1 with required huge investments of fresh water that is contaminated as well as large amounts of natural gas to heat the water to process the tar sands. Natural gas depositis in North America are rapidly declining as well. Shale and tar will not be our salvation when it comes to energy.

There very well may be a day -- perhaps in the near future -- where there is a technological breakthrough that will allow such deposits to be successfully developed so as to actually make a dent in world demand but I serioulsy doubt it. Regardless of peoples political slants on issues it is very uncomfortable trying to imagine a world moving past peak. It can REALLY ruin your day. All the more reason to pick up a copy and be informed about something your elected officials are trying their hardest to keep you in the dark.

Twilight in the Desert, by Matthew Simmons, is a dense yet important tome about the evidence behind various claims about the global supply of petroleum.

Though I can't say I especially enjoyed reading the book, I learned much. The key points seem to be that the production of oil is much more complex than we might guess and that there is not as much recoverable oil in the ground as many people estimate.

Simmons starts with a brief history of Saudi Arabia, of the Saudi Aramco Company, and of the industrialized production of oil in the country. He discusses the secrecy about the current oil resources in Saudi Arabia and the difficulty in making estimates even about daily oil production.

Before reading this book, I had naively assumed that oil just came up when you sunk a well into the earth. The reality, though, is that the pumping of oil from the ground is complicated by a host of factors. Simmons explains in detail several difficulties including:

-declining reservoir pressure as an oil field ages
-the emergence of a secondary gas cap
-corrosion in the pipes and equipment from water injection
-increasing water mixed around the oil and mixed with the oil
-unpredictable behavior of this water
-low productivity of later wells in an oil field

Simmons then goes on to explain that the major oil fields in Saudi Arabia have already peaked in their production. This is a bit of a controversial claim, so Simmons reinforces the assertion with copious data. The reader becomes well familiar with Ghawar, the largest oil field in the world, and also Abqaiq, Safaniya, and Berri, the next-largest oil fields in Saudi Arabia.

Simmons also discusses other oil fields in Saudi Arabia as well as major oil fields throughout the world. Given the importance of petroleum in our daily lives, it is important that we are familiar with the Daqing field of China, the Samotlor field of Russia, Prudhoe Bay in Alaska, and Cantarell in Mexico's Bay of Campache. After learning about these fields and others, I will read energy news with more understanding of the geography of oil.

Simmons ends with reasonable predictions about the future price of oil (much higher than today), and admonishes us to think deeply about conservation and alternative energy.

Throughout the book, Simmons explains the sources of his information and does a good job at providing evidence for his claims. In summary, I found this book to be dense, but fascinating and important.